Engaging physicians in cost savings initiatives: eliminating medication cost bias in the selection of inpatient medications

Physician Executive, Jan-Feb, 2005 by Richard M. Weinberg, Nimisha Vyas Bhatt, F. Randy Vogenberg

Higher cost medications or therapeutic regimens pose a serious question for physician executives and other hospital managers who must determine if the cost/benefit ratio of a newer technology drug helps the organization achieve its value proposition of providing optimal care.

Even when a hospital has robust data, engaging physicians to help with these decisions is often an elusive goal. The stakes are increasing as we move from routine antibiotic choices to evaluation of new, and often expensive, biotechnology-based medications or devices, some with costs that can run into thousands of dollars.

Hospitals typically approach the problem of increasing drug costs with a silo-structured analysis called a drug utilization review (DUR). (1) DUR is inefficient and ineffective because it fails to address several important issues including complications, length of stay, resource consumption, clinical outcome and satisfaction.

In response to the limitations of the DUR, we developed a methodology using each participating hospital's commonly available administrative databases to provide a detailed comparison of the total costs of managing similar patients receiving either low molecular weight heparin (LMWH) or unfractionated heparin (UFH).

The administrative databases we used were maintained primarily to support key administrative functions, including registration and billing, staff management, materials management, accounting and financial decision support. Clinical relevance was added by combining this data with clinical data from the UB-92 (2) and the hospital's pharmacy information system. The data elements are displayed in Table 1 (pg. 16).

The hope of many senior hospital managers--that these administrative databases could also be used to win physician collaboration in the hospital's efforts to control expenses through clinical guideline development--remains largely unfulfilled.

Explanations for this failure are various, and are most often laid at the feet of the physicians, citing their overarching demands for autonomy, authority and income preservation. Our experience suggests that other factors are more important and that the explanation is more complicated.

Methodology and findings

From 2001 to 2003 we studied the use of the two important anticoagulant medications for the prevention and treatment of venous thromboembolic disorders (VTE) in 15 hospitals across the U.S. (3)

The study used commonly available, hospital-specific administrative databases and a detailed application of the cost/charge ratio at the individual cost center level to compare the total cost of treating inpatients with relatively inexpensive UFH (about $1.00 per day to purchase) to the total cost of treating similar patients with LMWH (about $26.00 per day).

This comparison is highly relevant because VTE is a ubiquitous problem (4) with substantial morbidity, mortality and high costs and because LMWH has grown to become one of the top five line item expenses in acute care hospital pharmacies. (5) We also interviewed physicians and other key stakeholders to determine their attitudes about the use of the target drugs and how they approach the adoption of new drugs and practice patterns.

For each participating hospital, we looked at all inpatient admissions for a period of two years or more and determined in which diagnosis-related groups (DRGs) it was more cost-effective to use LMWH and in which it was more cost-effective to use UFH.

The data were formally reported to each hospital in a format designed to facilitate use in the hospital's quality management (QM) processes. All participating hospitals demonstrated substantial savings using LMWH that were not anticipated based on the difference in acquisition costs.

All participants demonstrated the potential for additional future savings in many, but not all DRGs and patient categories. (6) The findings are summarized in Table 2 (7) (pg. 17).

Clinical interviews

We conducted interviews at 14 of the 15 hospitals prior to data analysis. The interview process assumed that properly selected key stakeholders could identify the factors that facilitated or limited the institution's ability to achieve clinical effectiveness (8) in the use of these medications.

Some questions were identical for all interviewees but others were tailored for the various disciplines interviewed (clinicians, quality management personnel, senior managers and information services employees). Medical and quality management leaders at all 15 hospitals indicated that their hospital had not achieved an optimal level of clinical effectiveness in the use of UFH and LMWH, sometimes despite considerable effort and expense.

The process of modifying prescribing patterns for inpatient anticoagulation often begins with pharmacy managers or administrators asking why the less expensive alternative, UFH, cannot be used more frequently and LMWH less frequently.

Physicians respond that medication cost can only be evaluated in the broader context of risks and complications, patient satisfaction, staff satisfaction, cost of administration and, most importantly, outcomes like length of stay, morbidity and mortality. As a result, the total cost of care associated with a drug, not its acquisition cost, is the important metric.